Microsoft

The software company is clearly feeling the pinch of inflation.


(Photo: Reuters)

San Francisco 14 years after the start of the Azure cloud service by Microsoft the scope of the platform becomes visible. At least that’s what CEO Satya Nadella thinks. “The age of artificial intelligence has dawned and Microsoft drives it forward,” Nadella said Wednesday at the presentation of the quarterly figures.

Until now, Microsoft has steadily expanded its cloud services. After years of working in the background, Microsoft can now introduce brand new apps. “We have the most powerful AI supercomputing infrastructure in the cloud,” Nadella said. She specifically mentioned the partnership with the San Francisco company OpenAI. The day before, Microsoft had announced a billion dollar investment in the company.

With ChatGPT, OpenAI introduced a language program that can understand natural language and generate complex text on demand. The DALL-E app generates images based on text input. Corporate clients are using these solutions directly in their business processes, Nadella said. “More than 200 clients are already using it, from KPMG to Al Jazeera.”

>> Read about it: This chatbot would pass an MBA exam: this is how ChatGPT works, Microsoft’s billion-dollar hope

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In presenting the quarterly numbers, Nadella was clearly trying to present investors with a new growth story. Because the last quarter had been mixed for the software house.

Nadella posted the slowest growth in six years, with revenue growing 2 percent to $52.7 billion in the final quarter of last year. In the three months ending in December, net income fell 12 percent year-over-year to $16.4 billion. With both stocks, Microsoft missed analysts’ expectations.

PC business weakens significantly after Corona boom

Microsoft was hit particularly hard in the PC business, where revenue fell 19 percent and operating income fell 47 percent. During the Corona pandemic, the business grew strongly as many people worked from home and bought new computers for it.

But this special effect is over. According to consulting firm Gartner, global sales of laptops and desktops, which soared during the coronavirus pandemic, fell nearly 29 percent by the end of 2022.

This hits Microsoft squarely. The company produces computers by itself. At the same time, with Windows, it is the dominant operating system. The number of Windows licenses installed on new computers plunged 39 percent. And Microsoft voted its investors out on the continued weak sales numbers.

By contrast, the cloud business was a growth engine. Microsoft’s intelligent cloud business, which includes the Azure cloud computing business, grew 18 percent to $21.51 billion. Azure revenue grew 31 percent. Although it grew much more slowly than in previous quarters, analysts had expected significantly weaker numbers.

Microsoft shares initially rose about 4 percent in after-hours trading but fell again as CEO Nadella presented an outlook for the current quarter. As a result, Microsoft expects sales growth of 3 percent year-over-year to $51 billion.

Microsoft announced last week that it would lay off some 10,000 employees. After other technology companies like the facebook mom Goal, Twitter Y Amazon had announced major job cuts, the wave of layoffs reached the Windows group.

Microsoft is the first of the largest US technology groups to present its quarterly figures. next week will follow Apple, Amazonthe Facebook group Meta and the Google-Group alphabet.

More: Microsoft is investing “billionaires” in OpenAI, maker of ChatGPT

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